Lecturer in Economics at Newcastle University London, since September 2016, working on environmental economics, public economics, institutions, trade
and conflict studies

Last update: 16 August 2017.

Short CV
Lecturer: Newcastle University London (Since '16)
Post-doc: Oxford University ('13-'16)
PhD: University of Luxembourg ('09-'13)
MSc: Maastricht University ('07-'08)
BSc: Maastricht University ('04-'07)

On housing in Oxford and London
In response to an article in The Economist ("Two birds with one stone", July 18th, 2015), I made some calculations on the potential of building additional houses by redeveloping existing neighbourhoods.
The potential for London is about 2M homes. (see The Economist, Letters, August 1st, 2015).

For Oxford, it can go up to 57,000. See further my essay (PDF) on Oxford (Script in PostgreSQL replicating the results).

The book looks at the role of states (US, UK, NL, FR) and international organisations (UN, EU) in their attempts to prevent the genocide in Darfur (2003-2005); from early warning to limited action in the field of humanitarian assistance, mediation, sanctions and peace-keeping.
The book uses several theories to explain how decision-making led to the (absence) of international responses.

We document in the book how the Sudanese government is effective in reducing international pressure with its power over access to Darfur for humanitarian workers, peacekeepers and monitors, as well as by (threatening to) expel foreign diplomats. The tactics are similar to what occurred in Rwanda and Srebrenica. Very recent events indicate that these tactics are continuing and probably effective.

The book looks at the role of states (US, UK, NL, FR) and international organisations (UN, EU) in their attempts to prevent the genocide in Darfur (2003-2005); from early warning to limited action in the field of humanitarian assistance, mediation, sanctions and peace-keeping.
The book uses several theories to explain how decision-making led to the (absence) of international responses.

ISBN: 978-90-04-26031-3.

Media: an edited version of Chapter 3 is available at E-Internal Relations

Based on a study of three European parliaments, the article analyses parliamentary oversight on government policy towards gross human rights violations in third countries using the case of Darfur in Sudan (2003-2005). We find that parliaments with greater constitutional rights in foreign policy are more active in the scrutiny of executive action. Scrutiny is stronger in parliaments with developed and strong foreign affairs committees. Media and public awareness correlate with greater oversight activities in all the three chambers considered. In their oversight, MPs do not deter governments to consider the use of armed forces. Rather than revealing party differences, conflicts involving gross human rights violations such as Darfur are venues for the manifestation of division between the executive and legislature.

Dutch Disease and the mitigation effect of Migration: Evidence from Canadian Provinces

Michel Beine, Serge Coulombe and Wessel N. Vermeulen

The Economic Journal, Vol. 125, Issue 589, pp. 1574–1615, Dec 2015.

This paper looks at whether immigration can mitigate the Dutch disease effects associated with booms in natural resource sectors. We first derive predicted changes in the size of the non-tradable sector from a small general-equilibrium model à la Obstfeld-Rogoff, supplemented by a resource income and a varying labor supply. Using data for Canadian provinces, we test for the existence of a mitigating effect of immigration in terms of an increase in the size of the non-tradable sector triggered by the positive resource shock in booming regions. We find evidence of such an effect for the aggregate inflow of migrants. Disentangling those flows by type of migrants, we find that the mitigation effect is due mostly to interprovincial migration and temporary international migration. There is no evidence of such an effect for permanent international immigration. Nevertheless, interprovincial migration also results in a spreading effect of Dutch disease from booming to non-booming provinces.

This article presents the results of a comparative study of genocide prevention showing similarities that form a disappointing pattern of failure on the part of third parties to prevent genocide in three different situations: Rwanda, Srebrenica, and Darfur. Early, clear, and reliable warnings combined with a policy recommendation have not led to preventative action because they were not discussed by the responsible decision makers (Rwanda, Srebrenica) and/or because conflicting international concerns hindered firm action (Darfur). Instruments of prevention were available, in the form of UN peacekeeping troops who could have been empowered for successful prevention in combination with existing reinforcements (e.g., evacuation troops or NATO air support); however, this option was not on the decision makers’ agenda. The main explanation for the decisions made by these third parties is their inability to perceive a change from a peace-settlement situation to an emerging genocide and their consequent inability to react to such a change adequately. Rwanda and Srebrenica may be explained in this way, but not Darfur. Here the situation is different and more complicated, as this study shows by reference to the continuing international attention to the situation, on the one hand, and the continuing inability of third parties to change the situation on the ground, on the other. Sudan's political position in the world, as well as the negotiating power the Sudanese government draws from domestic circumstances, has deterred decision makers from initiating measures against Sudan's national sovereignty.

Macroeconomic determinants of European stock and bond correlations: A tale of two regions.

Erica R. Perego and Wessel N. Vermeulen

Journal of Empirical Finance, 2016, Vol.:37, pp.214-232.

This paper presents an analysis of the Euro-zone financial markets based on a joint assessment of bonds, stocks and stock-bond correlations between groups of Euro-zone countries. The dynamic correlations visualise the divergence of integration in Europe and highlight the heterogeneity in these markets. Panel regressions using this setup on dynamic correlations offer new insights on the role of macro-economic determinants of financial markets between assets and regions. We find that when we allow for regional division, not only cross-asset correlations within regions behave differently from each other, but also cross-assets cross-regions dynamic correlations can be explained with macro-economic factors such as the relative market uncertainty between countries, balance of payments dynamics and other key macroeconomic indicators. The robust role of economic fundamentals in European financial market correlations points to the need for European economic integration based on sound macro-economic fundamentals for both current and future Euro-zone members.

We discuss the role of the Netherlands with respect to the Darfur crisis during 2003-2005. From the moment the crisis broke out, the Netherlands was active as a major donor and tried to facilitate political solutions. During the period January 2004 - July 2005 it held the EU Presidency and was therefore involved in creating a common EU position. We discuss how policy was made while observing internal (domestic) and external (international) influences. We conclude that the Netherlands was partially successful in establishing a more active EU position regarding Darfur. However, we also find evidence that eventually the EU has lagged behind the response of the UN Security Council, despite being a major donor to emergency relief and the African Union mission in Sudan.

DOI 10.3138/gsi.8.2.04

Note: The published article is a quite different from the Working Paper, which has the title "The Role of the Netherlands in the international response to the crisis in Darfur."

Resource Income and the Effect on Domestic Neighbours: A case study on Canadian Provinces

Wessel N. Vermeulen

Resource income in a multi-regional setting allows for differentiated impacts of windfalls on the industrial development of each region. A resource exporting region suffers from Dutch disease through a spending effect and a real exchange rate ap- preciation. Whereas, a neighboring region will suffer from the real exchange rate appreciation but the increased demand from the region with the resource income of tradable goods will increase the traded good sector in the neighboring region. For a 2-region 2-sector model the equilibrium conditions on the labour allocation between the sectors are derived taking into account resource potential windfalls. The model is tested on and supported by a panel dataset of Canadian provinces.

Relaxing the assumption of fixed labour in a general equilibrium model studying the impact of resource income on the allocation of labour across sectors offers insights on how labour mobility may mitigate adverse effects such as de-industrialisation caused by resource income. The theoretical model suggests clear signs of the impact of labour (downward) and the resource income (upward) on the relative size of the service sector. Indirect effects are visible through the interactions of both variables on each other. The model is estimated in a fixed effect panel model, which offers support to the model’s direct and indirect effects.

This paper tests the theoretically founded hypothesis that the surge of SWF establishments is determined by three main factors: 1) the existence of natural resources profits, 2) the government structure and 3) the ability to invest usefully in the domestic economy. We test this hypothesis on a sample of 20 countries that established an SWF in the period 1998-2008 by comparing them to the roughly 100 countries that did not set up a fund in the same period. We find evidence for all three factors. The results suggest that SWFs tend to be established in countries that run an autocratic regime and have difficulties finding suitable opportunities for domestic investments. We do not find the net foreign asset position of a country to be similarly related to the explanatory variables, indicating that the establishment of an SWF is distinct from a national accounting result. We argue that our results indicate that it is relevant to study how an SWF interacts with the domestic economy and government policy.

We ask how a small open economy with heterogeneous firms responds to a resource windfall.
A resource windfall boosts demand but also affects wages such that production costs increase. The result is a higher number of firms and renewed selection among firms: New firms at the lower end of the productivity continuum can produce for the domestic market, while only the most productive firms continue to export. While the share of firms that sell traded varieties decreases, the average productivity of exporting firms increases.
The increase in the number of varieties caused by a larger number of firms and the inflow of additional imports implies
that there is an increase in aggregate welfare over and above the direct windfall gain.
We provide analysis in a model with two types of labor. The windfall causes a reallocation of labor types and a change in relative wages, thereby implying different welfare outcomes for each type of labor and the possibility of rising inequality.

Scarcity drives economic development:
The effect of energy subsidies on export diversification in the Middle East

Wessel N. Vermeulen

This study tests for the MENA region the effect of energy subsidies on export diversification in terms of exported varieties and number of destinations. Reform of fuel subsidies is a major issue for public finance and with regards to global climate change policy, while some MENA countries are among the highest subsidisers in the world. At the same time trade performance can be seen as a representation of general domestic economic development. Estimates suggest that subsidy reduction could be an effective tool to improve private sector performance through export diversification. Those MENA countries that have lower subsidies tend to export relatively more to advanced economies and more product varieties. These results are robust to controlling for unobserved country group characteristics, time trend, resource exports and income level.

Note: Prepared for the Workshop "The Geopolitics of Natural Resources in the Middle East" organised by the Center for International and Regional Studies, Georgetown University School of Foreign Service in Qatar.

For copyright reasons a working paper cannot be made available for this research.

Today's countries emerged from hundreds of years of conquests, alliances and downfalls of empires. Empires facilitated trade within their controlled territories by building and securing trade routes, imposing common languages, religions, legal systems, and facilitating migration. This led to the accumulation of trade-enhancing, or trading capital. In this paper we use data on the reach of 140 empires across the world since 2500 BC as well as on international trade in the 2000s to construct estimates of trading capital. We find that trading capital has a positive and significant effect on trade, consistent with a slow erosion of trade linkages after breakups and long-run persistence. Trade between countries that were once in a common empire is on average 24% larger than that between unrelated countries.

How do exports respond to changes in domestic trade costs? In particular how strongly are exports from one port affected by changes in the cost of exporting at neighbouring ports?
To answer these questions we extend the standard trade model with heterogeneous firms to have a multiple port structure where exporting is subject to port specific local transportation costs and port specific fixed export costs as well as international bilateral trade costs. We derive a gravity equation with multiple ports and show that gravity distortion due to firm heterogeneity is conditional on port comparative advantage and resulting substitution of export across differentiated ports.
We present evidence of the substitution effect using the 2011 Great East Japan Earthquake and following tsunami. This event allows us to measure the response of trade on ports not directly affected by the disaster. We detect a substitution effect for aggregate trade as well as differentiation at the sectoral level and by destination.